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Sales of newly built homes fall 16% in April as prices soar


According to U.S. Census, sales of new homes fell 16.6% from March and dropped 26.9% in April.

According to seasonally adjusted data, the annualized rate stood at 591,000 units. Analysts expected 750,000. Also, March’s reading was revised down.

This is the lowest sales rate since April 2020 when all was shut down. the Covid pandemic. As Americans searched for larger houses with ample outdoor areas to quarantine, their sales increased quickly.

This indicator is the most current in the market because it uses signed contracts for the month and not closings. The April increase in mortgage rates was the most significant, after rising steadily since January. According to Mortgage News Daily, the average 30-year fixed rate started the month at 4.8% and finished at 5.41 percent.

Rising interest rates are causing consumers to be hit with four-decades-high inflation. This is making it harder to purchase homes today at current prices. A median sale price for a home in April was $450,000. This represents a nearly 20% increase over the previous year.

The lack of available homes to buy has made new construction popular with buyers for the past 2 years. However, many are being priced out by rising prices. As rising inflation takes a larger chunk of Americans’ paychecks, and surging borrowing prices are pushing homebuyers’ wallets to the limit, “the market for new homes mirrors broader real-estate trends.”

The market is experiencing a sharp pullback in the demand. In fact, housing starts have been declining over the last few months. The inventory of new homes was able to rise sharply due to slower sales, reaching a nine month supply. A six month supply is usually considered to be balanced by buyer and seller.

Also, builders are beginning to notice an increase in cancellation rates. Analysts who track builders start to see an increase in cancellation rates, although they haven’t yet been reported in earnings releases.